Dubai is planning laws to give more protection to property investors after the financial crisis. Details of the proposed laws came in a newsletter from the law firm Al Tamimi and Co that published an interview between Lisa Dale, the head of the firm's property practice, and Emad Eldin Farouq, the senior legal adviser at the Dubai Land Department. Mr Farouq was not immediately available for comment.
The most significant elements of the proposed legislation relate to the protection of property investors in Dubai. These include a refund, or replacement property, for buyers where the developer delivers a defective property, and financial penalties for late delivery of property. The laws would also establish the grounds on which a purchaser can demand cancellation of the contract if, for instance, the developer refuses to link payment plans with construction milestones.
"The investor protection law is being proposed to deal with some specific issues identified last year where investors needed further assistance in dealing with errant developers," Ms Dale said. Another element of the legislation would allow Emiratis with land granted to them by the government to convert it to a freehold title, allowing them to sell it to another Emirati or GCC national or mortgage the property, Ms Dale said.
"The granted land system is a tradition in the UAE enabling nationals to have access to lands for the purpose of building their home or business premises," she said. "However, the system is quite limiting as there are restrictions on transacting with such land. If you upgrade your title from granted to freehold, you can sell the property to other UAE or GCC nationals, or you can put it into a property fund or mortgage it. It becomes a much more flexible asset."
The Dubai Land Department also plans to begin regulating property valuers and conveyancers by requiring them to obtain licences, as well as to create a new law to oversee property brokers who handle trust accounts for property deals, Ms Dale said. The department has created a draft law that would provide a regulated structure for establishing and managing property funds, which would "potentially provide a boost to the Dubai real estate market by generating an increased level of collective investment activity", she said.
"There are lessons to be learned from the crisis and we are emerging with a new legal regime. Loopholes in laws are being dealt with and things will become more organised in 2010," said Mr Farouq in Al Tamimi's newsletter. "We have a good training programme in place this year through the Dubai Real Estate Institute, for our own staff and outside practitioners." @Email:bhope@thenational.ae